02 Dec 2015

Comment: Can the Chancellor’s autumn statement prove to be a boost for Scotland’s landlords?

Comment: Can the Chancellor’s autumn statement prove to be a boost for Scotland’s landlords?

 

Adrian Sangster, Leasing Director, looks at the impact of the Chancellor’s autumn statement on landlords.

George Osborne’s Autumn Statement had a sting in the tail for landlords in England and Wales by announcing that from April 2016, landlords will have to pay a 3% surcharge on each stamp duty band.  The Treasury believes by introducing this it will raise an additional £1bn by 2021. 

The unlucky losers

Still reeling from the chancellor’s summer announcement they will no longer be able to claim tax relief at 40% on interest payments and the removal of the 10% wear and tear allowance, landlords have reacted angrily to the change.  When implemented, it means that properties worth between £125k and £250k where the stamp duty is 2%, buy to let landlords will pay 5%. Based on the average cost of £184k this means they will pay an extra £5,520 from next year.

And the winner is...

However for every loser there is a winner and could this be the Scottish private rented sector?   

For landlords looking to expand their portfolio, investing in Scotland could now appear a far more attractive proposition.  Leaving aside the recent challenges facing Aberdeen, the rental market in Scotland has been consistent for the past eight years, with average rents rising more or less in line with inflation and void periods remaining relatively low.  Tenant demand also remains high with social housing provision falling way below requirements.  This fact was highlighted in the recent Audit Scotland report, Housing in Scotland, which reported the supply of housing is not keeping up with levels of need, and the shortfall was likely to take 20 years to remedy.

Conclusion

The Scottish Government needs to recognise the opportunities this can offer Scotland by resisting the temptation to follow suit and categorically rule out introducing the surcharge here.  Landlords like nothing better than stability and certainty, so whilst they are it, those in the corridors of power at Holyrood should also seriously reconsider their plans to introduce rent controls and remove the ‘no fault’ termination ground.



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